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How Is Debt Divided in a California Divorce?

What It Means to Be a “Community Property” State

Since California is a community property state, most assets acquired during your marriage will be considered community property—and thus, subject to equitable distribution. This can include anything from shared vehicles and homes to bank accounts and life insurance policies.

What happens, however, when it comes to debt?
Just as you would be expected to split up the money that you’ve earned during your marriage, you would also be expected to share in the responsibility of repaying debt.

Unless you and your spouse have entered into your own agreement about how your assets and debt will be divided, the court will order that all community property be divided equally during your divorce. Even if one spouse is responsible for accruing most of the debt—either through medical expenses or credit card bills—both spouses will be liable for repaying it. The only type of debt that will not be subject to equitable distribution in a divorce is “separate debt.”

Community Debt vs. Separate Debt

When tasked with the responsibility of dividing your debts, the court will need to consider the character of each debt. This is important because “separate debts” belong only to the spouse who incurred them, whereas “community debts” will be divided between both spouses equally.

  • Community Debt:
    Community debts include those incurred after the date of marriage, but before the date of separation. If a debt was incurred during the marriage, even if only by one spouse, both spouses will share in the responsibility of repaying it after their divorce.
  • Separate Debt:
    Separate debts include those that were incurred before the date of marriage or after the date of separation. If one spouse accrued separate debts prior to their marriage, they alone would be responsible for repaying them once they have become divorced.

Why Your Date of Separation Could Be Important

Only debt acquired during the marriage will be considered “community debt,” which is why it is important to determine the date of your separation. If your spouse starts to rack up credit card debt after you separate, for example, you shouldn’t be held accountable for repaying these debts. While this may seem fairly simple, determining the date of separation is not always easy.

In some cases, the court will need to hold a separate trial just to determine the official date of separation. During this trial, two factors will be considered: the physical separation and one or both spouses’ intent to end the marriage. If you and your spouse had agreed to separate on a temporary basis, for example, the court will not consider this an official date of separation.

Division of Debt

Handling Debt in Complex Cases

For couples with high net worth, dividing debt can be complicated. The debts involved with owning multiple businesses, for example, could prove to be a contested issue within the divorce hearing. Just as dividing multiple streams of income can be complex, so also is the task of assigning who "owes" the debts associated with a business that provided for both spouses.

In addition, some couples in contested divorces face a sudden increase in spending from one spouse when a divorce is imminent but not finalized. As with the previous section of this page, recording the date of your separation will help prove how much debt is actually community debt.

Our certified specialist is prepared to represent couples who face complex situations arising from possessing assets and debts of significant net worth. Our attorney is prepared to uphold your rights and interests, ensuring that you are not saddled with unjust amounts of debt.

Discuss Your Case with the Team at Goldberg & Gille: 626-340-0955

In any divorce, property division is usually contentious . Both spouses want to ensure that they get what is fair, and oppositely, that they aren’t responsible for repaying more debt than they actually owe. If you are interested in protecting your rights, it is crucial that you seek counsel from a Pasadena divorce lawyer with the experience to effectively represent your best interests. Goldberg & Gille has more than 80 years of combined experience, so don’t wait to give us a call.

Have questions about your divorce? Contact the attorneys at Goldberg & Gille for your consultation!

Contact Us

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Pasadena Family Law Attorney
131 N El Molino Ave, Suite 310A,
Pasadena, CA 91101 (View Map)
Phone: (626) 340-0955
Local: (626) 584-6700

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Disclaimer

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.